Slide 1: DNO ASA Corporate Presentation
DNO ASA CORPORATE PRESENTATION Nordea January 4, 2007 Helge Eide, Managing Director 2006 Haakon Sandborg, CFO
Slide 2: Disclaimer
DISCLAIMER This Presentation includes and is based, inter alia, on forward-looking information and statements that are subject to risks and uncertainties that could cause actual results to differ. These statements and this Presentation are based on current expectations, estimates and projections abo
Slide 3: Investment Highlights
INVESTMENT HIGHLIGHTS DNO offers to investors: • A pure-play E&P investment • Solid foundation for growth • Diversified, risk balanced exploration portfolio with strong reserve growth potential • Exploration activities funded by high margin production • Rig capacity secured for extensive exploration
Slide 4: New Growth Cycle
NEW GROWTH CYCLE Realizing and returning values WI P50 Reserves (MBOE) 2001 - 2006 1st growth cycle New growth cycle • Initial focus on small and mature fields in the North Sea 144 138 125,4 • Shift in strategy in 2004 - approximately 85,5 USD 230 million in sales proceeds from 64,3 72 divestments o
Slide 5: World Wide Portfolio
WORLD WIDE PORTFOLIO 35 LICENSES - 16 AS OPERATOR Northern Europe Norway • 24 Licenses (8 as Operator) • One producing asset • Large exploration potential • Minimized financial exposure from exploration Middle East UK • 1 Licenses as Operator • 10 Licenses (8 as Operator) • 3 producing assets • Larg
Slide 6: Highlights YTD 2006
HIGHLIGHTS YTD 2006 Operations • Doubling of reserves at low FD&A cost • Commenced fast-track development in Iraq • High development drilling in Yemen • Further drilling on Goliat on the NCS • Production up 9 percent Y on Y Financials • Strong increase in operating revenues and cash-flow • Increased
Slide 7: Strong Reserve Development
PERFORMANCE LAST 21 MONTHS STRONG RESERVE DEVELOPMENT WI Reserves P+P (MBOE) Primarily organic reserve growth Last 21 months • Discoveries at Goliat (NCS) and 160 Tawke (N. Iraq) adds 70 million 140 barrels in P+P reserves (WI) to DNO 120 Tawke • Reserves have increased by 92 100 percent YTD 80 Goli
Slide 8: Production Review
PRODUCTION REVIEW Copyright 2007 DNO ASA Nordea January 4, 2007
Slide 9: Working Interest Production
WORKING INTEREST PRODUCTION 2003 - 2006 Production (BOPD) 2006 Production (BOPD) 30 000 20 000 Tasour Sharyoof Nabrajah Glitne Divested production 15 000 20 000 10 000 10 000 5 000 0 0 2003 2004 2005 2006 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov YTD 2004 – 2006 2006 • Slight annual growth • Q3: 1
Slide 10: Yemen Assets
YEMEN ASSETS Producing assets in Yemen • Tasour Field in Block 32 * • Nabrajah Field in Block 43 * • Sharyoof Field in Block 53 • Production from the three fields are tied back to Block 14 facilities operated by Nexen Exploration assets in Yemen • Block 44 * • Block 47 * • Block 72 * • Block 84* * D
Slide 11: Yemen Production Update
YEMEN PRODUCTION UPDATE Production (WI) (BOPD) High margin production 20 000 Tasour Sharyoof Nabrajah • YTD (11 months) production from Yemen increased by 8 percent 15 000 • Nabrajah production below plan • Successful appraisal well at 10 000 Tasour adds new production at beginning of September 5 00
Slide 12: Tasour Area Status and Planned Activities
TASOUR AREA STATUS AND PLANNED ACTIVITIES Tasour Field • Tasour #22ST on line early September • Tasour #23ST test gave 200 bopd in December, Planning long-term test in Q107. Godah Field • Godah # 2 & 3 brought on stream in Q406 Tasour 22ST Godah Field Tasour 23 (Basement prospect) Copyright 2007 D
Slide 13: Sharyoof Area Status and Planned Activities
SHARYOOF AREA STATUS AND PLANNED ACTIVITIES Prospective area close to Sharyoof Field Summary: • Sharyoof # 23 on stream in Q406 • Bayoot SW #2 exporting oil at 300 – 600 bopd (trucking) • Hekma # 1 test gave 800 bopd in December, from deep Kholan sandstone. 2 more tests do be done. • Bayoot South #1
Slide 14: Nabrajah Area Status and Planned Activities
NABRAJAH AREA STATUS AND PLANNED ACTIVITIES Planned activities • Commissioning of water handling and gas injection facilities • 3-D seismic within Nabrajah area completed – will serve as important input to new well locations and reserve revision • Shaibah #1 exploration well to be Prospect/leads dri
Slide 15: NCS Production Update
NCS PRODUCTION UPDATE Production (WI) (BOPD) Production update • Glitne (10%) has delivered 5 000 stable production during the past 4 500 few months 4 000 • Initial gross reserves 25 million 3 500 barrels 3 000 • Expected recovearble gross 2 500 reseres is close to 50 million 2 000 barrels 1 500 • N
Slide 16: Exploration Review
EXPLORATION REVIEW Copyright 2007 DNO ASA Nordea January 4, 2007
Slide 17: Yemen: Continued High Drilling Activity
YEMEN CONTINUED HIGH DRILLING ACTIVITY Yemen drilling plan next 18 months - > 30 wells: • Operated by DNO • BL 32, 43, 44, 47, 72 • 12 Exploration wells • 12 appraisal / development wells • Operated by others • BL 53 • 6 exploration wells plus development wells (plan yet to be finalised) Copyright
Slide 18: Northern Iraq Exploration Update
NORTHERN IRAQ EXPLORATION UPDATE Summary to date • Acquisition of 440 km 2D seismic Tawke • Drilled and tested 5,000 bopd from Tawke # 1 & 1A • Tawke Oil in Place 330 million barrels – 100 millon barrels recoverable (gross) • Acquired 3-D seismic across Tawke structure • Drilling of Tawke # 2, teste
Slide 19: Tawke Early Production Development
TAWKE EARLY PRODUCTION DEVELOPMENT Tawke Early Production Plan TAWKE CPF Plan is based on test production from Tawke # 1 / 1A, and Tawke # 2 Capacity of Pipeline and Central Processing Facilities ; 50,000 bopd First oil planned Q1 2007 18 development wells on Tawke planned for 2007 Copyrig
Slide 20: Norwegian Continental Shelf: Strong Position
NORWEGIAN CONTINENTAL SHELF STRONG POSITION Norway • DNO holds 24 licenses in Norway and 1 in UK (9 as Operator) • Relatively unexplored compared to the UKCS • DNO has secured rig capacity Copyright 2007 DNO ASA Nordea January 4, 2007
Slide 21: Barents Sea
NORWEGIAN CONTINENTAL SHELF BARENTS SEA Recoverable P50 reserves substantially higher than initially anticipated • 250 million barrels (P50) - 37,5 million barrels net to DNO • Additional appraisal well on Goliat South completed in November 2006 • First exploration well on Goliat West did not show m
Slide 22: The Norwegian Sea
NORWEGIAN CONTINENTAL SHELF THE NORWEGIAN SEA PL 263/263B Zita (30%) • One exploration well commenced in December 2006 (Norsk Hydro is Operator) • P50 unrisked prospect resource potential is approx. 200 million barrels – 60 million barrels to DNO Copyright 2007 DNO ASA Nordea January 4, 2007
Slide 23: High Potential Prospects
NORTHERN EUROPE HIGH POTENTIAL PROSPECTS 9 wells planned to be drilled on NCS next 18 months: Operated by DNO • Lie, Torkildsen, Draupne • 3 exploration wells (commencing Q1 2007) Operated by others • Goliat, Zita, Ragnarrock • 6 exploration & appraisal wells (including 2 additional wells at Goliat
Slide 24: 18 Months Drilling Plan
18 MONTHS DRILLING PLAN PARTICIPATE IN OVER 50 WELLS STARTING MID YEAR 2006 Northern Europe Norway • 9 exploration/appraisal wells Middle East Northern Iraq • Continuous drilling with three rigs Yemen • Approx. 30 wells – of which 18 exploration wells Africa Syria • One well • 3 exploration / apprai
Slide 25: Year to Date Key Financial Figures
NET ENTITLEMENT YEAR TO DATE KEY FINANCIAL FIGURES Sales (NOK million) EBITDA (NOK million) Net Profit (NOK million) +92%* +86%* -29%* 1200 700 400 600 350 1000 1058 300 500 800 250 400 600 406 200 300 400 550 150 200 100 130 200 100 218 92 50 0 0 0 YTD 2005 YTD 2006 YTD 2005 YTD 2006 YTD 2005 YTD 2
Slide 26: Year to Date Key Financial Figures (Adjusted)
NET ENTITLEMENT YEAR TO DATE KEY FINANCIAL FIGURES Sales (NOK million) EBITDA (NOK million) Net Profit (NOK million) +92%* +90%* +28%* 1200 700 350 1000 600 300 1058 500 216 250 800 400 200 216 110 600 406 300 110 150 400 550 200 100 130 200 100 218 50 92 0 0 0 YTD 2005 YTD 2006 YTD 2005 YTD 2006 YT
Slide 27: Netback to Exploration Coverage
RESULT OF OPERATIONS NETBACK TO EXPLORATION COVERAGE Netback (RoO) to Total Investments (NOK million) Increasing total investments • 100 percent increase YTD 450 Netback producing activities • Start of Northern Iraq development 400 Exploration cost expensed • Development on blocks 32 & 43 in Yemen 3
Slide 28: Outstanding Reserve Economics
IMPORTANT KEY PERFORMANCE INDICATORS OUTSTANDING RESERVE ECONOMICS FDA (P+P) Recycle Ratio (P+P) Reserve Replacement (P+P) 2.0 USD/bbl 7.5 times 9.4 times 5 10 10 5 5 9,4 7,5 2,6 2,9 4,5 4,7 2,5 4,1 2,0 3,4 3,9 3,2 0 0 0 2003 2004 2005 YTD 2003 2004 2005 YTD 2003 2004 2005 YTD 2006 2006 2006 Low cos
Slide 29: DNO Is Delivering Reserves at Low Cost
MARKET FD&A DNO IS DELIVERING RESERVES AT LOW COST FDA Cost (USD) Exploration 16 performance DNO FDA Cost Sector FDA Costs M&A Deal Costs • DNO has 14 consistently delivered top 12 quartile exploration 10 performance • DNO adds 8 considerable 6 shareholder value through the drill bit 4 • DNO's explo
Slide 30: Building Values
BUILDING VALUES TRANSFORMING RESOURCES TO RESERVES AT LOW COSTS Substantial upside potential Short to medium term value drivers • Organic reserve growth through ~30 expl. wells the drill bit • Achieving first oil production 138 from Northern Iraq in Q1 2007 ~12 expl. wells 28 2P reserves YE 2P reser
Slide 31: Our Mission
OUR MISSION IS TO BE A LEADING EXPLORATION AND PRODUCTION COMPANY FOCUSED ON TRANSFORMING 2006 RESOURCES TO RESERVES AT LOW COST, GENERATING SUBSTANTIAL AND CONSISTENT VALUE FOR OUR SHAREHOLDERS